What Is Digital Estate Planning

The idea of estate planning may have once conjured images of wealthy individuals passing along sprawling country mansions, gleaming yachts, and jewel-encrusted family heirlooms. But modern-day estate planning is for everyone. Today’s comprehensive estate plans provide for digital assets. While not all of us have mansions and yachts to pass along, most of us have digital property. Estate planning for digital assets ensures that this property is handled the way that you want after you die.

What Are Digital Assets?

The term “digital assets” covers virtual properties that are stored online such as cryptocurrency and non-fungible tokens (NFTs), online financial accounts (for example, PayPal or Venmo), email accounts, online businesses and websites, photos and videos, subscriptions, loyalty programs, and social media profiles. Digital assets often have an associated value–either financial or sentimental–that is worth passing along.

Digital assets are unique because they require access. Online service providers use security measures–sometimes in multiple layers–to protect digital assets. Security measures include passwords, two-factor or even multi-factor authentication, biometrics, encryption, and device-based access controls. These safeguards prevent unauthorized access but without a digital estate plan in place, they can also prevent family members from gaining access after you die.

Why You Need a Digital Estate Plan

A digital estate plan ensures that your wishes are carried out and the right people have access to your digital assets. A well-designed plan:

• Protects the financial value of your digital assets
• Preserves your personal memories
• Safeguards you and your digital presence against identity theft
• Reduces stress for your loved ones

Digital assets require intentional planning because our privacy laws limit access and the service providers must follow strict rules. Without specific authorization, secure access instructions, and regular updates, your digital assets may not be handled according to your wishes.

Digital Estate Planning in North Carolina

In North Carolina, your fiduciary (executor, trustee, or agent under a power of attorney) does not automatically have authority to access your digital content. Instead, you must specifically grant this permission. North Carolina adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). This law authorizes you to give your fiduciary–such as an executor (appointed in a will), a trustee (appointed in a trust), or an agent (appointed in a power of attorney)–the legal authority to manage your digital assets after death. Without such an appointment in place, the digital service provider may deny access because service providers are bound by state and federal privacy laws as well as their own service terms. In addition to allowing you a way to authorize access to your digital accounts, RUFADAA relieves the digital service provider of liability if they grant access in good faith.

Under RUFADAA, the order of priority for access authorization is:

1. Any designation you make with the online service provider’s tools such as FaceBook’s Legacy Contact or Google’s Inactive Account Manager.
2. The instructions you provide in your will, trust, or power of attorney.
3. The online service provider’s terms of service.

In addition to making a complete list of all of your digital assets, your estate plan instructions should specifically authorize your fiduciary to:

• Access digital assets and accounts
• View the content of communications
• Manage, transfer, archive, or delete accounts

Without this detailed authorization, the online service provider may only provide limited access to the account.

Further, your estate plan should explain in detail what you want your fiduciary to do with the digital assets. For example:

• Do you want your social media accounts memorialized, archived, or deleted?
• Do you want your fiduciary to monitor your memorialized social media accounts?
• Do you want your photos and videos transferred to someone?
• Do you want your subscriptions and loyalty awards transferred or donated?
• How should your digital financial accounts be distributed?

A Word on Passwords

While passwords may grant your fiduciary access to some of your digital assets, it is important that you pass them along in a secure way. Including passwords in your will means that the passwords will be publicly available–which is obviously not a good idea. If you use a digital password manager, you can set up access for your fiduciary. Otherwise, it may be a good idea to record and store your passwords in a secure location that will be accessible to your fiduciary at your death.

Take Control of Your Digital Legacy

If your executor, trustee, or agent cannot access your digital accounts, your digital assets will remain in limbo–meaning treasured memories and valuable assets are not passed on to your loved ones. At Carolina Tax, Trusts & Estates, a department of Van Camp, Meacham & Newman, PLLC we help individuals and families across North Carolina integrate digital property into their estate plans. Safeguard your digital legacy, and contact our team today to get started.